# FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 07/24/2026 OSCAR NO. 615961 -PAGE Page 1 of 32 * PUBLIC *

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- **Document type:** Agency decision

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FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 07/24/2026 OSCAR NO. 615961 -PAGE Page 1 of 32 * PUBLIC *

PUBLIC

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
OFFICE OF ADMINISTRATIVE LAW JUDGES
__________________________________________

)
In the Matter of
)
)
Dr. Larry Overly, DVM
)
)
Appellant.
)
__________________________________________)

Docket No. 9443

ORDER GRANTING LEAVE TO SUBMIT BRIEFS ON REMAND
By Order dated July 21, 2026, the Federal Trade Commission granted
Appellant Dr. Larry Overly’s review application, vacated my January 27, 2026
decision, and remanded the matter for further consideration consistent with the
Commission’s decision in Matter of Serpe, Docket 9441, 2026 WL 1906387 (FTC
June 30, 2026). A copy of the Commission’s decision is included as Attachment 1.

On July 16, 2026, in Matter of Scott, Docket 9449, I issued an Order Denying
Appellant’s Objection and Motion to Strike. This Order discusses the Commission’s

Serpe decision and its applicability to that case. A copy of this order is included as
Attachment 2.

If either party deems it appropriate, they are GRANTED LEAVE to submit a
brief setting out their views on how the Commission’s Serpe decision and my
subsequent Scott Order may affect the relief ordered on this review. The brief is

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limited to 2,250 words and must be filed by no later than 5 p.m. Eastern Time on
August 5, 2026 and contemporaneously served on the other party. The word count
exclusions set forth in FTC Rule of Practice § 3.22(c) will apply.

ORDERED:

Jay L. Himes

Jay L. Himes
Administrative Law Judge

Date: July 24, 2026

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ATTACHMENT 1

In the Matter of Philip Serpe., 2026 WL 1906387 (2026)

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2026 WL 1906387 (F.T.C.)
Federal Trade Commission (F.T.C.)
In the Matter of Philip Serpe.
Docket No. 9441
June 30, 2026
*1 COMMISSIONERS:
Andrew N. Ferguson, Chairman
Mark R. Meador
DECISION OF THE COMMISSION ON REVIEW UNDER 15 U.S.C. § 3058(c)(1)
Philip Serpe has worked with racehorses for decades. He has had a successful career by many metrics, training horses that have
won some of the sport's biggest races. But a post-race urine test showed that one of his horses had traces of a banned substance
after a 2024 win. The private party tasked by Congress with regulating the sport, subject to Commission oversight, charged him
accordingly. Following arbitration, Serpe's results were disqualified and he was suspended for two years, but he received no
financial penalty. One of the Commission's administrative law judges reviewed the matter and affirmed those sanctions, adding
a $25,000 fine on top. The Commission sua sponte granted review shortly thereafter.
Mr. Serpe believes that the process Congress, the Commission, and that regulator have developed to adjudicate his charges
violates his constitutional rights. We hold that the administrative law judge was not authorized to impose a civil penalty itself,
but that Mr. Serpe's constitutional rights were not violated.
We therefore affirm in part and reverse in part the administrative law judge's decision. Mr. Serpe's disqualification and
suspension stand, but he need not pay the civil penalty imposed by the administrative law judge.
I.
The Horseracing Integrity and Safety Act 1 (“the Act”) directs the Horseracing Integrity and Safety Authority (“the Authority”),
a private entity, 2 to propose rules pertaining to horseracing (“HISA Rules”) and to enforce those rules through either
administrative proceedings or federal-court actions. 3 In 2023, the Authority fulfilled one of its statutory obligations 4 by
proposing the Anti-Doping and Medication Control Rule (“ADMC Rule”). 5 Among other things, the ADMC Rule prohibits
the presence of banned substances in the bodies of covered horses and sets punishments for violations. 6 Covered horse trainers
whose horses have tested positive for banned substances will have their horses disqualified from affected races 7 and may be
suspended from participating in covered horse races for two years and fined unless they can show that they were neither at
fault for, nor negligent in allowing, exposure to the substance. 8 The ADMC Rule also lays out the process for investigating,
charging, and adjudicating Anti-Doping Rule Violations (“ADRVs”). Staff of the ADMC enforcement agency, the Horseracing
Integrity and Welfare Unit (“HIWU”), have the authority to conduct interviews, issue document requests, inspect facilities, and
access veterinary records as part of an investigation of possible rule violations. 9 HIWU also conducts post-race testing. 10 If a
test produces a positive result for a banned substance, a covered person receives a notice and may request testing of a B sample.
If that test is waived or comes back positive, HIWU may issue a Charge Letter. 11

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*2 An arbitration panel consisting of either one or three impartial arbitrators 12 then conducts an arbitration in accordance
with the procedures set forth in the ADMC Rule and determines whether a violation occurred. In these proceedings, HIWU has
the burden of proving the ADRV “to the comfortable satisfaction of the hearing panel .... This standard of proof in all cases is
greater than a mere balance of probability (i.e., a preponderance of the evidence) but less than clear and convincing evidence
or proof beyond a reasonable doubt.” 13
ADMC violations that arise from a post-race sample, like here, automatically lead to the disqualification of the covered horse's
results at the covered race and all purses or other prizes are forfeited. 14 In cases where a horse tested positive for a banned
substance, the horse is also subject to a period of ineligibility 15 and the responsible person (in most cases, the trainer) is subject
to a period of ineligibility commensurate with their level of fault. 16 The ineligibility period may, however, be eliminated or
reduced if the covered person can demonstrate that they bear no or no significant fault or negligence. 17 The responsible person
may also be required to pay a fine. 18 The final decision of the arbitration panel is subject to review by an Administrative
Law Judge (“ALJ”) and then, on a discretionary basis, by the Commission. 19 Consistent with the Act, the Federal Trade
Commission exercises oversight of the Authority by approving, modifying, and adding to the HISA Rules. 20 The Commission
also engages in oversight by reviewing the final sanctions imposed by the Authority through its arbitration proceedings. 21
When the Authority imposes sanctions, either the Commission or an aggrieved person can initiate de novo review before an
ALJ. 22 The ALJ “may make any finding or conclusion that ... is proper and based on the record,” and “may affirm, reverse,
modify, set aside, or remand for further proceedings, in whole or in part, the final civil sanction of the Authority.” 23
The Commission may then decide to review de novo the ALJ's decision, either on its own motion or on application for review
by an aggrieved party, if (1) the proceedings before the ALJ contained a prejudicial error, (2) the decision involved an erroneous
application of the HISA Rules, or (3) if “the decision involved an exercise of discretion or a decision of law or policy that
warrants review by the Commission.” 24 We may likewise make any finding or conclusion that is proper and based on the record
and “affirm, reverse, modify, set aside, or remand for further proceedings, in whole or in part, the decision of the” ALJ. 25
II.
*3 Appellant Philip Serpe is a horse trainer covered by the Act. 26 In September 2024, Mr. Serpe was notified that one of his
horses, Fast Kimmie, had tested positive for clenbuterol. 27 The ADMC Rule bans clenbuterol because it is “typically used to
improve the flow of air to the lungs in a horse” and can have “muscle-building effects in racehorses.” 28 So, in October 2024,
HIWU notified Mr. Serpe that it was charging him. 29
Consistent with the HISA Rules, 30 that charge was litigated before a neutral arbitrator in June 2025. 31 Mr. Serpe provided
letters from his veterinarians, who swore they did not prescribe or dispense clenbuterol to Mr. Serpe's horses, and he argued
that any of a dozen or so individuals who came into contact with Fast Kimmie in the days leading up to the positive drug test
could have been responsible. 32 But on July 9, 2025--ten months after Mr. Serpe was put on notice that Fast Kimmie tested
positive for clenbuterol-- the arbitrator determined that Mr. Serpe had violated the Rule and suspended him for two years. 33
The arbitrator did not levy a fine.
The Authority submitted the arbitrator's punishments to the Commission as the Authority's final civil sanctions, and Mr. Serpe
timely sought ALJ review. He only nominally disputed liability. He instead argued that the Authority was required to fine him
if it suspended him. In his view, a suspension sanction would not necessarily trigger his Seventh Amendment right to a jury

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because a suspension is akin to an injunction--an equitable remedy to which the Seventh Amendment jury-trial right does not
ordinarily apply. 34 A fine, by contrast, resembles a remedy at law to which the Seventh Amendment jury-trial right ordinarily
applies. 35 Mr. Serpe asked the ALJ to “‘set aside’ the Arbitrator's decision as ‘unlawful,”D’ and “remand with directions for
HIWU not to initiate an arbitration against” him. 36
On September 12, 2025, the ALJ held that HIWU had proved that Mr. Serpe violated the ADMC Rule and that Mr. Serpe did
not disprove that the violations were attributable to him. On the other hand, the ALJ held that the Authority violated Mr. Serpe's
statutory due-process right by interfering with HIWU's ““prosecutorial independence” and that the arbitrator thus insufficiently
considered whether to issue a fine. In the first instance, and without being asked to do so, the ALJ determined both that (1)
a fine should have been included in the sanctions award and (2) under Securities & Exchange Commission v. Jarkesy, 37 the
adjudication did not trigger Mr. Serpe's Seventh Amendment jury-trial right because the Act and HISA Rules concern a public
right. The ALJ ultimately affirmed the Authority's sanctions and added a $25,000 fine on top. 38
*4 Three days later, the Commission, on its own motion, granted review of the matter. 39 Mr. Serpe later filed three separate
motions concerning the scope of this review. 40
On September 23, 2025, Mr. Serpe asked the Commission to clarify the issues being reviewed. He did not request nor did he
propose that the Commission address any specific issues. The Commission ordered the parties to address: (1) whether the ALJ
was authorized to impose a civil sanction not imposed by the arbitrator and not requested by any party to the proceeding; (2)
whether, if authorized, the additional sanction, here the fine, was appropriate; and, (3) whether Mr. Serpe's Seventh Amendment
jury-trial right was triggered. 41
On December 10, nearly three months after the Commission granted review, Mr. Serpe filed his first motion for leave to brief
additional issues. These issues were: (4) whether the Commission has the authority to adjudicate sanctions imposed pursuant
to the Act; (5) whether enforcement under the Act violates the private-nondelegation doctrine; and (6) whether the Authority
violated Mr. Serpe's due-process rights. 42 Before the Commission could resolve his motion, Mr. Serpe filed his opening brief, so
we denied that motion as moot and notified the parties that we would consider the brief in full. 43 Importantly, the Commission
did so “without making a determination that such issues were preserved by Mr. Serpe or are otherwise appropriately addressed
in this proceeding.” 44 As discussed below, we now determine that Mr. Serpe preserved none of these three issues. 45
And on January 22, 2026, Mr. Serpe filed his second motion for leave to brief additional issues. Therein he requested
reconsideration of whether he was liable at all, in light of supposedly new evidence. The Commission denied the motion,
ultimately declining to question the ALJ's decision to affirm the arbitrator's liability finding in light of an argument that was
not presented to the ALJ. 46
III.
The parties have briefed six issues for Commission review, but Mr. Serpe forfeited three of them. 47 The remaining three concern
whether the Authority and the Act itself violate Mr. Serpe's Seventh Amendment right to a jury trial. The Seventh Amendment
requires causes of action and remedies resembling those traditionally litigated in, and awarded by, courts of law to be tried
before a jury in an Article III court (unless the party protected by the Seventh Amendment forgoes that right). 48 Because the
Authority-- including its delegees, HIWU and the arbitrator--is not a state actor, the Authority's adjudication did not trigger Mr.
Serpe's Seventh Amendment right. And because the ALJ was not authorized to impose a civil penalty against Mr. Serpe, the
ALJ's review of the Authority's decision did not trigger Mr. Serpe's right to a jury trial either.

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(1) The Seventh Amendment and the Jarkesy Framework
*5 The right to be tried by a jury of one's peers is as near to sacrosanct as any that exists in the American legal system. Two
hundred and fifty years ago this week, Thomas Jefferson submitted to the world that Americans needed independence from
King George III because, among other “abuses and usurpations,” he was depriving Americans of jury trials. 49 When it came
time to consider what rights were so important that the Constitution could not do without their codification, the jury trial was
front and center. 50 Over the last 90 years, however, Congress has slowly disfavored the jury trial, moving adjudication of
many federal-law disputes from Article III courts to administrative agencies. But the last decade has seen the right to a jury
trial become a focus once again.
In Securities & Exchange Commission v. Jarkesy, the Supreme Court reconfirmed that Congress cannot give executive-branch
agencies, rather than federal courts, the authority to adjudicate claims that are “quintessentially suits at common law.” 51 “Even
when an action ‘originates in a newly fashioned regulatory scheme,’ what matters is the substance of the action, not where
Congress has assigned it.” 52 In short, where the federal government brings “claims whose causes of action are modeled on
common law [claims] and that provide a type of remedy available only in law courts,” the claims “typically must be adjudicated
in Article III courts.” 53
Cases that implicate the Seventh Amendment because of a common-law cause of action typically come with a common-law
remedy. 54 As the Supreme Court has explained, the remedy often is “all but dispositive.” 55 In Jarkesy, for example, the claim
was securities fraud--closely related to the quintessentially common-law claim of fraud--and the remedy was a civil penalty-akin to the “prototypical common law remedy” of money damages. 56 The Court thus held that the claim belonged before a
jury in an Article III court, rather than in an SEC hearing room. Similarly, in Tull v. United States, the United States sought to
recover civil penalties for violations of the federal environmental laws, and civil penalties are “a type of remedy at common law
that could only be enforced in courts of law,” where the jury-trial right attached. 57 And in Granfinanciera, S.A. v. Nordberg,
the Supreme Court held that an action to avoid a fraudulent transfer required a jury because, at common law, such an action was
“traditionally provided by law courts or on the law side of courts having both legal and equitable dockets.” 58 The upshot of
Jarkesy and the Supreme Court's other Seventh Amendment cases is that if the cause of action sounds in the common law, and
the remedy is a remedy that would have been available in a court of law rather than in chancery, the claim must be adjudicated
before a jury in an Article III court. 59
*6 There is one exception to this rule. A claim that implicates a “public right” need not be litigated before a jury in an Article
III court even if the cause of action sounded in the common law and the remedy were available only in a court of law. Thus, for
example, the Supreme Court held in Oil States Energy Services v. Greene's Energy Group that the grant of a patent is a public
right which may be adjudicated in an executive-branch agency rather than an Article III court notwithstanding that the validity of
patents was ordinarily the subject of suits at common law. 60 Only claims that, at common law, had to be decided in a court of law
by its “nature” triggered the Seventh Amendment. 61 This public-rights exception “has been applied in a handful of areas where
such matters ‘historically could have been determined exclusively by the executive and legislative branches' without Article III
involvement.” 62 Exactly what this means “is an ‘area of frequently arcane distinctions and confusing precedents”D’ 63 because
the “Court has not ‘definitively explained’ the distinction between public and private rights, and its precedents applying the
public-rights doctrine have ‘not been entirely consistent.”D’ 64 The doctrine at least includes revenue collection, immigration,
foreign commerce, the administration of public lands, 65 and workplace safety regulation. 66 If a claim implicates a public right,
Congress is free to assign the matter for adjudication as it sees fit. 67

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Throughout this matter, the parties seemed to agree that Mr. Serpe's right to a jury trial would be triggered only if he was
facing a fine, because a fine is the sort of monetary remedy that typically would be available only in a court of law. 68 There
was disagreement as to whether the relevant focus for that inquiry was the Authority's adjudication or the ALJ's review of the
Authority's sanctions. And the parties disagreed over whether the Act and the HISA Rules concerned public or private rights.
But Mr. Serpe repeatedly acknowledged that his right to a jury trial in federal court hinged on whether he faced a fine. 69
Now, for the first time, he argues that the entire enforcement action “must be adjudicated in federal court irrespective of whether
the Seventh Amendment 70 applies because it does not concern public rights.” 71 Mr. Serpe did not raise the argument before
the ALJ and waited months before raising it to the Commission; he has thus forfeited the argument. 72 As we told him in
our February 4, 2026, Order we will not, in reviewing the ALJ's decision, address new issues and new arguments that were
not presented to the ALJ. 73 Even had Mr. Serpe timely raised this argument, however, the Commission is skeptical of its
merits. One federal district court has rejected this argument outright. 74 And federal courts of appeal have recognized that
“nothing in Jarkesy displaced an administrative agency's ability to impose equitable remedies, consistent with their statutory
authority.” 75 Only one court has extended Jarkesy's reasoning beyond the Seventh Amendment to claims involving purely
equitable relief, holding that the Commission's deceptive-advertising actions are so parallel to traditional common-law actions
for deceit that Article III places them exclusively within the jurisdiction of the federal courts notwithstanding the equitable
nature of the remedy. 76 The Fifth Circuit's decision in Intuit was, however, narrowly cabined and heavily reliant on historical
records indicating that the Commission, in policing unfair methods of competition, was enforcing a common-law standard. 77
Nothing in that opinion or the history of the Act would suggest that Mr. Serpe would have been able to prevail on this argument
had he raised it properly. 78
(2) Jarkesy in Arbitration
*7 The Act and rules provide Arbitrators with the power to issue fines. 79 Mr. Serpe was therefore subject, at least potentially,
to the imposition of a remedy of the sort that ordinarily would have been imposed by a court of law rather than the chancery.
If the Seventh Amendment applied in this context, Mr. Serpe would have been guaranteed a jury trial from the moment that
he was charged with violating the ADMC Rule. But the Seventh Amendment guarantees a jury trial only where sanctions are
being levied and adjudicated by a “state” actor (“state” being used in the same sense as “government” rather than referring to
one of the several States). 80 And the Authority is neither the state nor a state actor.
Mr. Serpe recognizes that the Authority is a private entity. 81 Indeed, his entire nondelegation argument turns on that
proposition. 82 He further recognizes that the Seventh Amendment “protect[s] only against infringement by governments,” 83
but he argues that the Authority's adjudicative process is “fairly attributable” to the government 84 and can thus “be regarded
as governmental action for constitutional purposes.” 85 As relevant here, the Supreme Court has indicated a private entity's
conduct may be state action if “the government acts jointly with the private entity.” 86 But this requires more than the mere fact
that an ALJ and the Commission review the Authority's enforcement determination.
Mr. Serpe largely relies on the Commission's role in rulemaking to satisfy the state-action doctrine's test. Congress has directed
the Commission to take part in the rulemaking process. 87
The Commission approves, and may even set or modify, the rules that the Authority must follow in its horseracing regulation.
But “unless the [Authority] is performing a traditional, exclusive public function,” “[b]eing regulated by the State does not
make one a state actor.” 88 And, in Manhattan Community Access Corp. v. Halleck, the Supreme Court explicitly recognized
that “running sports associations and leagues” is not such a function. 89

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What Mr. Serpe really needs to show is that enforcement of those rules is a joint enterprise. Unlike rulemaking, however, the
Commission does not actively take part in the Authority's investigative and enforcement decisions. As Mr. Serpe recognizes,
administrative enforcement of the rules is “a multi-step process” 90 that begins with the Authority. 91 The Act and the HISA
Rules require the Authority to bring administrative enforcement actions through its enforcement agency, HIWU, which in the
case of ADRVs adjudicates charges before an arbitral body. In this way, the Authority makes its own initial determination
whether covered persons violated the rules, whether sanctions are warranted, and which sanctions are warranted--all without
Commission input or involvement. 92 Instead, we wait until the Authority's decision has been made and review it as Congress
has directed, either sua sponte or on an aggrieved party's application.
*8 Lugar v. Edmondson Oil Co., the precedent Mr. Serpe believes most parallel to his, is a good example of what a joint
enterprise actually looks like. In Lugar, the government created a process by which one private party could apply for attachment
of a second private party's property and government officials would seize that property themselves. In other words, Lugar
involved the government acting with a private party. Compare that to what we have here: two private parties argue their case
before an impartial hearing officer, as required by government-approved rules, and then the government reviews the impartial
hearing officer's determination as part of the government's regulation of a private party.
Neither Lugar nor Halleck support treating the Authority as a state actor capable of violating Mr. Serpe's Seventh Amendment
rights in considering whether to levy a civil penalty against him. 93
(3) Jarkesy and the ALJ
Having determined that only ALJ or Commission proceedings under the Act may implicate the Seventh Amendment, and even
then only when the covered person faces the prospect of a fine, we turn to whether the ALJ's review fits that bill. It does not
because we hold that, if the Authority declines to impose a fine, neither the ALJ nor the Commission are authorized to impose
one. Mr. Serpe therefore never faced the prospect of having a monetary penalty imposed by a government actor, which would
have triggered his Seventh Amendment right to a jury trial.
Both the Act itself and longstanding common-law principles foreclose the ALJ or Commission from imposing a fine where the
Authority declined to do so. First, Congress, by using the word “modify” authorized only incremental changes to sanctions
actually imposed, rather than the imposition of new sanctions that were not imposed. Adding a fine where the Authority
determined that only equitable relief was necessary would be a transformative change beyond the scope of that authorization.
Second, background principles of American law counsel against allowing a reviewing body to punish a litigant for seeking
review or reward a litigant that did not seek review. It would contravene these principles for an ALJ to add a fine that no party
wanted.
a) Authority to Impose Fines
The question in which Mr. Serpe's Seventh Amendment claim turns is whether the ALJ had the authority to impose a fine
sua sponte where the Authority forewent imposing a fine, such that Mr. Serpe was potentially subject to the imposition by a
government actor of a sanction similar to those imposed by the law courts at common law. If not, then Mr. Serpe never faced the
prospect of a fine by a government actor and his Seventh Amendment right, as recognized by Jarkesy, was never implicated.
In seeking review, Mr. Serpe and the Authority were in agreement: the ALJ cannot impose a fine sua sponte. Mr. Serpe best
presented the parties' agreement: “The ALJ may not ... impose [a] fine on de novo review. The ALJ must instead ‘set aside’
the Decision and direct HISA, through HIWU, to enforce its charge against [Mr. Serpe] in an Article III court[.]” 94 Mr. Serpe
now argues otherwise, but we agree with his original position.

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*9 Mr. Serpe argues that the Act “give[s] FTC ALJs authority to review cases and impose civil sanctions they deem appropriate
regardless of the sanctions imposed by HIWU arbitrators.” Without further elaboration, he asserts that “[t]he phrase ‘final civil
sanction’ refers to the set of sanctions that the Arbitrator imposed.” 95 And, he argues, “adding an additional sanction is a
modification of the total mix of sanctions that HISA allows to be ‘modif[ied].”D’ 96 But to say that the imposition of a fine
“modifies” a suspension is akin to saying “the French Revolution ‘modified’ the status of the French nobility.” 97
Reading a grant of authority to “modify” a decision as authorizing the fundamental transmutation of that decision betrays the
word. “Modify” “connotes moderate change” and would lose its nuance if stretched to “mean both ‘to change in some respects'
and ‘to change fundamentally.”D’ 98 Mr. Serpe nevertheless argues that “modify” means something different here than it does
everywhere else for two reasons. 99 First, this case involves the word in an adjudicative context, not a rulemaking context. 100
We do not understand why the use of the word in a statute about rulemaking would carry an entirely different meaning than
its use in a statute about adjudications, and Mr. Serpe fails to elaborate. The word's connotation does not change depending
on what one is modifying. Whether one is modifying a rule or a sanction, ““virtually every dictionary ... says that ‘to modify’
means to change moderately or in a minor fashion.” 101 Mr. Serpe has no answer for this.
Second, he argues that the context in which the word “modify” appears in Section 1209 of the Act (the adjudication section) 102
makes clear that it means “to change” without the ordinary connotation of “limitation or increment” 103 because it “is grouped
with the authority to ‘affirm’ and ‘reverse’ the sanction.” 104 His argument fails. For one thing, he cannot explain why its
appearance alongside “affirm” and “reverse” would fundamentally alter its ordinary meaning of minor or moderate change.
Worse still, he commits the very sin he decries by ignoring statutory context. The adjudication section provides that the ALJ
may “affirm, reverse, modify, set aside, or remand” the Authority's “final civil sanction.” 105 Section 1204, however, which
governs the Commission's supervision of the Authority's rulemaking, grants the Commission the power to “abrogate, add to,
and modify the rules of the Authority.” 106
*10 “Add to” does the work in the rulemaking section that Mr. Serpe argues ““modify” does in the adjudication section. 107
“Modify” in the rulemaking section therefore quite obviously carries the word's ordinary connotation of limitation or increment
rather than wholesale change. If it did not, it would be mere surplus to “add to,” which we cannot interpret it to be. 108 When
Congress uses “‘identical words [] in different parts of the same statute,”D’ the “usual presumption” is that the words “carry ‘the
same meaning.”D’ 109 In the presence of this presumption, Mr. Serpe would need an especially compelling explanation of why
“modify” means one thing in the rulemaking section, and something entirely different in the adjudication section. And given that
Congress's inclusion of language in one section of a statute but exclusion of that language in another section of the same statute
is intentional, 110 and that we must give full effect to Congress's intentional inclusions and exclusions, 111 Mr. Serpe also would
need an especially compelling explanation of what work “add to” is doing alongside ““modify” in the rulemaking section given
that he reads “modify” to mean “add to” in the adjudication section. But he offers no explanation for either incongruity. He
therefore gives us no reason to read “modify” to bear anything other than its usual connotation of limited or moderate change.
Of course, this does not leave the Commission without recourse in conducting oversight of the Authority. Although “modify”
does not allow adding a sanction, Congress gave the ALJ the ability to “set aside,” “in whole or in part.” 112 Congress has
therefore given us the authority to change a sanction fundamentally by removing all or part of a sanction. And, as Mr. Serpe
argued in seeking review, should the ALJ or Commission think imposed sanctions are too lenient, we are authorized to “remand”
the matter to the Authority for further proceedings. But Congress withheld from the ALJ and the Commission the authority to
add a species of sanction that the Authority declined to impose--a withholding that statutory context makes clear was intentional
and to which we must give full effect.
b) Party Presentation Principles & Greenlaw

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There is a second reason why it was improper for the ALJ to impose a fine in Mr. Serpe's case: It was beyond the scope of
appellate review. The American legal system is built on the principle of party presentation; when it comes to what is best for each
party in litigation, courts assume that the parties know best and decide the case accordingly. 113 Of course, the Commission is
not an Article III court. Our task is oversight of the Authority and, we, unlike the courts, can review the Authority's sanctions on
our own motion. When we do so, we set the scope of review and have parties brief the questions we believe need answering. But,
in the vast majority of cases, ALJ review is initiated by an aggrieved party, and the ALJ sits in the shoes of an appellate court.
*11 When sitting as neutral arbiters judging what is proper under the Act and HISA Rules, the ALJ must take care to act
accordingly and “decide only questions presented by the parties,” absent good reason to abstain. 114 This also means that the
ALJ must abide by the “longstanding rule” against ““alter[ing] a judgment to benefit a nonappealing party.” 115 In accordance
with the scheme Congress set out in the Act, the ALJ may grant only the relief requested by the applicant for review, whether that
be the aggrieved party or the Commission itself, absent the extraordinary circumstances that Article III courts have recognized
necessary to justify departure from this longstanding rule. 116
As a practical matter, we recognize that Congress has decided that the Authority cannot appeal its own final civil sanctions, 117
meaning that the ALJ must typically abstain from modifying those sanctions in the Authority's favor. 118 The ALJ's departure
from this cardinal rule was error, and we reverse it.
c) Propriety of the Fine
Because Mr. Serpe's Seventh Amendment jury-trial right did not attach before the ALJ's review, and because the ALJ was not
authorized to impose a civil penalty that would have triggered that right, we need not address whether imposition of the fine
would have been appropriate nor whether the Jarkesy framework applies in this case.
***
For the above reasons, we AFFIRM IN PART the Administrative Law Judge's decision, and REVERSE IN PART. The final
civil sanctions issued by the Authority are upheld but the $25,000 fine imposed by the ALJ was improper and cannot stand.
By the Commission.
April J. Tabor
Secretary
FTC

Footnotes
1

15 U.S.C. ch. 57A.

2

15 U.S.C. § 3052(a) (“The private, independent, self-regulatory, nonprofit corporation, to be known as the ‘Horseracing
Integrity and Safety Authority,’ is recognized for purposes of developing and implementing a horseracing anti-doping

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and medication control program and a racetrack safety program for covered horses, covered persons, and covered
horseraces.”).
3

Id. §§ 3055, 3056, 3057(c)(1).

4

See Id. § 3055(a) (requiring “horseracing anti-doping and medication control” rules).

5

Fed. Trade Comm'n, Notice of HISA Anti-Doping and Medication Control Rule, 88 Fed. Reg. 5,070 (Jan. 26, 2023),
https://www.federalregister.gov/documents/2023/01/26/2023-00957/hisa-anti-doping-and-medication-control-rule.

6

See Fed. Trade Comm'n, Order Approving the Anti -Doping and Medication Control Rule Proposed by
the Horseracing Integrity & Safety Auth ority (Mar. 27, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/
P222100CommissionOrderAntiDopingMedicati; see also 15 U.S.C. § 3055.

7

HISA Rule 3220(a)(1).

8

HISA Rules 3223-29.

9

HISA Rules 3040(a)(2), 3040(b)(8); see also 15 U.S.C. §§ 3054(e)(1)(E), 3055(c)(4)(B).

10

HISA Rule 3132, 3133(a).

11

HISA Rule 3248.

12

The arbitrators' impartiality must be “commensurate with the seriousness of the alleged” violations and resultant civil
sanctions. 15 U.S.C. § 3057(c)(3).

13

HISA Rule 3121(a).

14

HISA Rule 3221.

15

HISA Rule 3229.

16

HISA Rule 3223.

17

HISA Rules 3223(b), 3224, and 3225.

18

HISA Rule 3223(b).

19

HISA Rules 3263, 3264; 15 U.S.C. § 3058. The Commission's procedures for review of final civil sanctions imposed
under the Act are set forth in 16 C.F.R. Part 1, Subpart T.

20

15 U.S.C. § 3053(b)(2) (“A proposed rule, or a proposed modification to a rule, of the Authority shall not take effect
unless the proposed rule or modification has been approved by the Commission.”); id. § 3053(c)(2) (“The Commission
shall approve a proposed rule or modification if the Commission finds that the proposed rule or modification is consistent
with [the Act] and applicable rules approved by the Commission.”); id. § 3053(e) (“The Commission ... may abrogate,
add to, and modify the rules of the Authority promulgated in accordance with [the Act] as the Commission finds
necessary or appropriate[.]”).

21

Id. § 3058(b) (providing for “de novo review” of a sanction imposed by the Authority “by an administrative law judge”
upon “application by the Commission or a person aggrieved”); id. § 3058(c) (“The Commission may, on its own motion,
review any decision of an administrative law judge” or, in its discretion, grant “an application for review” submitted by
“[t]he Authority or a person aggrieved by” an such decision).

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22

15 U.S.C. § 3058. The Authority cannot seek review of its own decision. Id.

23

Id. § 3058(b)(3).

24

Id. § 3058(c)(2)(A), (C).

25

Id. § 3058(c)(3).

26

ALJ Decision at 4.

27

Id. at 6.

28

Id.

29

Id. at 7.

30

See HISA Rules, Series 7000 (delegating the Authority's responsibility to adjudicate ADMC Rule violations to an
independent arbitral body).

31

ALJ Decision at 11-12.

32

Id. at 8.

33

Notice
of
Appeal
to
ALJ,
Ex.
A,
https://www.ftc.gov/system/files/ftc_gov/
pdf/613720.2025.07.15_notice_of_appeal_and_application_for_review_redacted.pdf.

34

See FCC v. AT&T, 608 U.S. --, 146 S. Ct. 1418, 1430 (2026) (rejecting argument that “the Seventh Amendment applies ...
even where no money is at stake” because the Seventh Amendment “applies only to suits “where the value in controversy
shall exceed twenty dollars”).

35

SEC v. Jarkesy, 603 U.S. 109, 122-23 (2024). (discussing Tull v. United States, 481 U.S. 412, 422 (1987)).

36

ALJ Decision at 17-18, 22 (quoting Serpe's Opening Brief).

37

693 U.S. 109.

38

See generally ALJ Decision.

39

Order
Partially
Staying
ALJ
Decision,
d9441_2025.09.15_commission_order_partial_stay__0.pdf.

40

Mot.
Clarification
and
Extension
(Sep.
23,
2025),
https://www.ftc.gov/system/files/ftc_gov/
pdf/614134.2025.09.23_motion_for_clarification_and_extension_of_time.pdf; Mot. Leave to Br. Add'l Issues (Dec.
10, 2025), http://www.ftc.gov/system/files/ftc_gov/pdf/614420.2025.12.10_serpe_ftc_mot._to_expand_briefing.pdf;
Combined Mot. Consider Add'l Evid. (Jan. 22, 2025), https://www.ftc.gov/system/files/ftc_gov/
pdf/614722.2026.01.22_new_evidence_motion_and_exhibits.pdf.

41

Order Granting Mot. Clarification (Sept. 30, 2025),
d9441_2025.09.30_commission_order_regarding_clarification_.pdf.

42

Mot.
Leave
to
Br.
Add'l
Issues
(Dec.
10,
2025),
pdf/614420.2025.12.10_serpe_ftc_mot._to_expand_briefing.pdf.

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43

Order
Den.
As
Moot
(Jan.
2,
2026),
https://www.ftc.gov/system/files/ftc_gov/pdf/
d9441_2026.01.02_order_denying_motion_regarding_additional_issues_.pdf.

44

Id.

45

See infra nn. 72, 92 & 93 and accompanying text.

46

Order
Den.
In
Part
(Feb.
4,
2026),
https://www.ftc.gov/system/files/ftc_gov/pdf/
d9441_2026.02.04_commission_order_denying_in_part_appellant_motion_.pdf.

47

See infra nn. 72, 92 & 93 and accompanying text. As communicated in our February 4, 2026, Order, we think it prudent
to ensure that our review of an ALJ's decision is actually a review of the ALJ's decision, not a review of a case never
presented to the ALJ. See Order Den. In Part. We thus routinely refuse to consider matters that were not brought before
the ALJ absent compelling reasons to do so. See 16 C.F.R. § 1.147(b)(4), (c)(1).

48

Jarkesy, 603 U.S. 109.

49

The Declaration of Independence para. 2 (U.S. 1776).

50

See Jarkesy, 603 U.S. at 121-22 (quoting The Federalist No. 83, p. 495 (C. Rossiter ed. 1961) (A. Hamilton)).

51

Id. at 133 (quoting Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 56 (1989)).

52

Id. at 134 (quoting Granfinanciera, 492 U.S. at 52).

53

Id. at 136.

54

In re Express Scripts, 176 F.4th 301, 309 n.6 (4th Cir. 2026) (“[W]hen courts today try to evaluate an equitable ‘claim’
separately from an equitable ‘remedy,’ they are often asking a question without any clear historical answer--at least
insofar as that claim originated in equity's concurrent jurisdiction. This difficulty perhaps explains the Supreme Court's
repeated statements that the remedial inquiry is ‘more important.”D’).

55

Jarkesy, 603 U.S. at 122-23 (discussing Tull, 481 U.S. at 422).

56

Id. at 122-26.

57

Id.; Tull, 481 U.S. at 422. Tull, of course, originated in federal court, but a jury trial was not afforded.

58

492 U.S. at 49.

59

See Express Scripts, 176 F.4th at 309.

60

584 U.S. 325, 339-340 (2018).

61

Id. at 340 (quoting Stern v. Marshall, 564 U.S. 462, 484 (2011)).

62

Ortega v. Off. of the Comptroller of the Currency, 155 F.4th 394, 402 (5th Cir. 2025).

63

Id. (quoting Thomas v. Union Carbide Agric. Prods., 473 U.S. 568, 583 (1985)).

64

Oil States Energy Servs., 584 U.S. at 334 (quoting N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 69
(1982), and Stern, 564 U.S. at 488).

65

Id. at 402-03 (collecting cases).

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66

Atlas Roofing Co. v. Occupational Safety & Health Rev. Comm'n, 430 U.S. 442 (1977). Serious doubt has been cast as
to the forcefulness of this precedent, but the Supreme Court, in Jarkesy, specifically recognized its continuing validity.
Until the Supreme Court formally overrules it, we are bound to recognize this public-rights example.

67

Id. at 455.

68

See, e.g., Notice of Appeal to ALJ at 2-3 (arguing that the arbitrator was required to levy a fine and that such a fine
would trigger Mr. Serpe's Seventh-Amendment jury-trial right).

69

See
Serpe
Second
Supp.
Br.
(May
19,
2026),
https://www.ftc.gov/system/files/ftc_gov/
pdf/615478.2026.05.19_2nd_notice_of_supp._auth.pdf (“[T]he availability of a civil money penalty remedy in Serpe's
adjudication is ‘virtually determinative in entitling [him] to a jury trial.”D’). This is despite presenting what he believed
to be analogous common-law causes of action to the Commission. See Opening Br. at 18 -21. To be clear, Mr. Serpe's
is not a case where a cause of action is so analogous that it outweighs the unavailability of a legal, rather than equitable,
remedy. A strict-liability charge for the presence of illegal substances in a racehorse is not an action in debt; the Authority
is not suing Mr. Serpe to collect owed money but to establish liability for an offense. See Opening Br. at 18. Nor is Mr.
Serpe's case an action for fraud, breach of contract, or tortious interference. Se e id. at 19-21. Mr. Serpe is not being
punished for lying to the Authority, for breaking “a promise to ride a fair race,” or for “intentionally undermin[ing] the
race's integrity.” He is being punished because of the amount of a drug found in his horse's blood. His promises, state
of mind, and intentions are irrelevant to that claim.

70

Mr. Serpe seeks to apply the Jarkesy framework outside of the Seventh Amendment context. Mot. Leave to Br. Add'l
Issues at 3-4; Serpe Supp. Br. at 1. In his view, the Jarkesy framework is merely a “necessary part of the Seventh
Amendment analysis,” Mot. Leave to Br. Add'l Issues at 3-4, that applies regardless of whether legal or equitable
remedies are ultimately sought. Serpe Supp. Br. at 1-2 (discussing Intuit, Inc. v. FTC, 170 F.4th 411 (5th Cir. 2026));
see also Intuit, 170 F.4th at 416-17 n.5.

71

Opening Br. at 24.

72

In re Luis Jorge Perez, 2024 WL 3824065, at *4 (F.T.C. Aug. 8, 2024); see also In re Luis Jorge Perez (Comm'r Ferguson,
concurring), 2024 WL 3824062, at *2 (F.T.C. Aug. 7, 2024).

73

Order Den. In Part at 4.

74

Scott v. HISA, No. 2:25-cv-632, 2025 WL 2987598, at *9 (D.N.M. Oct. 22, 2025) (“Nothing in Jarkesy limited agencies'
power to seek civil fines for suits without a common law mirror or to pursue equitable remedies. Arbitration is thus
obviously appropriate ... when the HIWU seeks exclusively equitable relief.”).

75

NLRB v. Starbucks Corp., 159 F.4th 455, 474 (6th Cir. 2025); see also NLRB v. N. Mtn. Foothills Apts., 157 F.4th 1089,
1199-1200 (9th Cir. 2025) (equitable monetary relief award does not implicate Jarkesy).

76

Intuit, Inc. v. FTC, 170 F.4th 411, 420 (5th Cir. 2026).

77

Id. (quoting Sears, Roebuck & Co. v. FTC, 258 F. 307, 311 (7th Cir. 1919), and then citing FTC v. Gratz, 253 U.S.
421, 427 (1920)).

78

As discussed above, none of Mr. Serpe's claimed common-law analogues are actually analogous. See supra n. 69.

79

HISA Rule 3223(b).

80

See Thomas v. Humboldt Cnty., 146 S. Ct. 27, 28 (2025) (statement of Gorsuch, J., respecting the denial of certiorari)
(“When a federal agency accuses someone of fraud and seeks civil penalties, the Seventh Amendment guarantees that
individual the right to have the case heard by a jury of his peers--not by other agency officials who work side by side with

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those bringing the charges. But thanks to Bombolis, state and local agencies pursuing similar charges and similar relief
sometimes claim that they are free to dispense with the hassle of proving their case to a jury.” (referencing Minneapolis &
St. Louis R. Co. v. Bombolis, 241 U.S. 211 (1916))); see also Nguyen v. Wells Fargo Clearing Servs., No. 4:24-cv-1310,
2025 WL 436062, at *4 (E.D. Mo. Feb. 7, 2025) (“[W]hatever the [government] can (or, more accurately, cannot) do
in the context of civil enforcement proceedings has no bearing on what private parties can (or in this case, must) do in
the context of agreeing to arbitrate their private disputes.”).
81

Opening Br. at 13.

82

Id. at 25-26.

83

Id. at 13 (quoting Lugar v. Edmondson Oil Co., 457 U.S. 922, 936 (1982)).

84

Id. (quoting Lugar, 457 U.S. at 937).

85

Id. (quoting Lebron v. Nat'l R.R. Passenger Corp., 513 U.S. 374, 378 (1995)).

86

Manhattan Cmty. Access Corp. v. Halleck, 587 U.S. 802, 809 (2019) (listing the “few limited circumstances” in which
“a private entity can qualify as a state actor”).

87

See 15 U.S.C. § 3053; see also Walmsley v. FTC, 117 F.4th 1032, 1038-39 (8th Cir. 2024) (vacated on other grounds).

88

Halleck, 587 U.S. at 814, 816.

89

Id. at 810.

90

Opening Br. at 14.

91

The Authority's enforcement actions occur pursuant to HISA Rules the Commission has approved, and the Commission
at all times maintains oversight over the Authority, even if the Commission does not conduct initial enforcement
investigations and proceedings.

92

Mr. Serpe argues, for the first time in this matter, that this scheme violates the Supreme Court's private nondelegation
doctrine. Opening Br. at 25. He has forfeited this argument. See In re Luis Jorge Perez, 2024 WL 3824065, at *4 (F.T.C.
Aug. 8, 2024); see also In re Luis Jorge Perez (Comm'r Ferguson, concurring), 2024 WL 3824062, at *2 (F.T.C. Aug.
7, 2024). In any event, his argument is contrary to the consistent position of this Commission across extensive litigation
in the federal courts of appeals and the Supreme Court. See Brief for the Federal Respondents, Walmsley v. FTC, 145
S. Ct. 2870 (2025) (No. 24 -420); Brief for the Federal Respondents in Opposition, Oklahoma v. United States, 145
S. Ct. 2836 (2025) (No. 32 -402); Petition for a Writ of Certiorari, FTC v. Nat'l Horsemen's Benevolent & Protective
Ass'n, 145 S. Ct. 2837 (2025) (No. 24 -429); see also Oklahoma v. United States, 163 F.4th 294 (6th Cir. 2025). HIWU
is “subject to the FTC's pervasive surveillance and authority” and any sanction it imposes is necessarily contingent on
our approval. Oklahoma, 163 F.4th at 311 (6th Cir. 2025) (citing FCC v. Consumers' Rsch., 606 U.S. 656, 695 (2025));
see also 15 U.S.C. § 3058(b), (c) (providing that the Commission, on its own motion, can review the Arbitrator's and
the ALJ's decisions); but see Nat'l Horsemen's Benevolent and Protective Ass'n v. Black, -- F.4th --, No. 23-10520, 2026
WL 1689717 (5th Cir. 2026). This satisfies the private non-delegation doctrine. And, as the Authority points out, it is
especially ironic to make the argument in this case, where the Commission sua sponte granted review, demonstrating
the active role the Commission has taken in overseeing the Authority. Answer Br. at 24.

93

Mr. Serpe also argues for the first time that his Fifth Amendment rights have been violated. This argument has been
forfeited. In re Luis Jorge Perez, 2024 WL 3824065, at *4 (F.T.C. Aug. 8, 2024); see also In re Luis Jorge Perez (Comm'r
Ferguson, concurring), 2024 WL 3824062, at *2 (F.T.C. Aug. 7, 2024). Because the Authority is not a state actor, though,
this argument would have failed regardless. See Navarro v. U.S. Ctr. for SafeSport, -- F.4th --, 2026 WL 1129085, at
*7-9 (4th Cir. 2026) (affirming district court's holding that sport regulatory organizations were “not state actors and thus

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[] not subject to the Due Process Clause of the Fifth Amendment”). Mr. Serpe has made no argument that the ALJ or the
Commission itself has deprived him of constitutional due process, and so any Fifth Amendment claim would have failed.
Nor has Mr. Serpe argued that the Authority deprived him of statutory due process. The Act provides that HISA
rules “shall provide for adequate due process, including impartial hearing officers or tribunals commensurate with the
seriousness of the alleged ... rule violation and the possible civil sanctions for such violation.” 15 U.S.C. § 3057(c). Even
had he argued that this statutory protection was violated, the Authority's conduct resulted in no additional consequences.
The only “consequence” Mr. Serpe faced as a result was a guarantee that the process would not violate his constitutional
rights.
94

Notice of Appeal to ALJ at 3. At argument, Mr. Serpe clarified that this position was intended only to convey that the
Seventh Amendment prevented the ALJ from levying a fine, not that the Act did. Oral Arg. Tr. at 12 ¶¶ 21-24.

95

Opening Br. at 9.

96

Id. (brackets in original).

97

MCI Telecomms. v. AT&T, 512 U.S. 218, 227-28 (1994).

98

See id. at 227-28; see also Biden v. Nebraska, 600 U.S. 477, 494-95 (2023).

99

Opening Br. at 9 n.34 (citing Biden v. Nebraska, 600 U.S. at 494, and then citing FDA v. Brown & Williamson Tobacco
Corp., 529 U.S. 120, 133 (2000)).

100

Id.

101

MCI Telecomms., 512 U.S. at 225.

102

15 U.S.C. § 3058(b)(3)(A)(ii), (c)(3)(A)(ii).

103

Ibid.

104

Opening Br. at 9 n.34 (citing Brown & Williamson, 529 U.S. at 133).

105

15 U.S.C. § 3058(b)(3)(A)(ii), (c)(3)(A)(ii).

106

Id. § 3053(e).

107

Walmsley, 117 F.4th at 1040.

108

Polselli v. IRS, 598 U.S. 432, 441 (2023) (“We ordinarily aim to give effect to every clause and word of a
statute.” (cleaned up)).

109

Answer Br. at 10 (citing Henson v. Santander Consumer USA, 582 U.S. 79, 85 (2017) (quoting IBP, Inc. v. Alvarez,
546 U.S. 21, 34 (2005)).

110

Russello v. United States, 464 U.S. 16, 23 (1983) (“Where Congress includes particular language in one section of a
statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.” (cleaned up)).

111

Mullin v. Al Otro Lado, 609 U.S. -- (2026), slip op. at 10 (June 25, 2026) (“We ‘are required to give effect to Congress'
express inclusions and exclusions.”D’ (quoting Nat'l Ass'n of Manufacturers v. Dep't of Defense, 583 U.S. 109, 126
(2018)).

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112

15 U.S.C. § 3058(b)(3)(A)(ii).

113

Greenlaw v. United States, 554 U.S. 237, 244 (2008).

114

Id. (quoting United States v. Samuels, 808 F.2d 1298, 1301 (8th Cir. 1987)); see also id. at 262-63 (Alito, J., dissenting)
(“A reviewing court will generally address an argument sua sponte only to correct the most patent and serious errors,”
as required to prevent “grossly prejudicial errors of law that undermine confidence in our legal system”).

115

Id.at 244 (majority op.).

116

See In re M-A-S-, 24 I. & N. Dec. 762, 767 n.2 (B.I.A. 2009) (rejecting respondent's argument that the immigration judge
needed to impose a bond, so that he could pay it and be released, because “[t]he argument that the Immigration Judge
should have placed additional conditions on” respondent ““would normally come from the DHS, and the DHS has not
advanced such an argument on appeal”); see also In re Wendy Cabrera, AXXX XX2 063, 2009 WL 2437127, at *2 n.4
(B.I.A. July 24, 2009) (“[T]he immigration judge erred .... [but] since the DHS has not appealed the decisions below, we
will not disturb [them].”); In re Jaime Humberto Garcia-Tavera, AXXX XX8 019, 2009 WL 952489, at *2 (B.I.A. Mar.
19, 2009) (“[T]his Board may not rectify the Immigration Judge's mistake and order the respondent detained without
bond” because DHS ““has not appealed the Immigration Judge's erroneous order”).

117

See 15 U.S.C. § 3058(b)(1) (allowing for ALJ review only “on application by the Commission or a person aggrieved
by the civil sanction”).

118

See Greenlaw, 554 U.S. at 245-46 (“Congress has eased our decision by specifying the instances in which the
Government may seek appellate review of a sentence[.]”).
2026 WL 1906387 (F.T.C.)

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PUBLIC

ATTACHMENT 2

In the Matter of Jason Scott, DVM, Appellant., 2026 WL 2111924 (2026)

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2026 WL 2111924 (F.T.C.)
Federal Trade Commission (F.T.C.)
In the Matter of Jason Scott, DVM, Appellant.
Docket No. 9449
July 16, 2026

PUBLIC
ORDER DENYING APPELLANT'S OBJECTION AND MOTION TO
STRIKE THE AUTHORITY'S DISPOSITIVE BRIEF AND REPLY BRIEF
*1 The Horseracing Integrity and Welfare Unit (“HIWU”) charged Appellant Dr. Jason Scott with two violations of Rule
3214(a) of the Anti-Doping and Medication Control (“ADMC”) Program, which prohibits Possession of Banned Substances
absent “compelling justification” for Possession. 1 After a hearing, the Arbitrator ruled in HIWU's favor and awarded the
following sanctions:
A period of ineligibility of eighteen (18) months from the date of the initial inspection (February 13, 2025) for possession of
two prohibited substances. The 18 month period of ineligibility will expire on August 13, 2026.
A fine of $25,000 and a payment of $5,000 in adjudication costs based upon all of the facts and evidence presented. 2

In its opening briefing of the merits of this review proceeding, the Horseracing Integrity and Safety Authority (“the Authority”)
argued that Dr. Scott was properly found liable for the two Possession Anti-Doping Rule Violations (“ADRVs”) and that “the
real error in this case is the sanction issued by the Arbitrator. Dr. Scott committed two Possession ADRVs, each of which carries
a default sanction of two years Ineligibility and a $25,000 fine, yet the Arbitrator imposed reduced and backdated Consequences
[that is, the sanctions] without a legal basis for doing so.” 3 The Authority therefore argued that I should award sanctions
“consistent with the ADMC Program Rules.” 4
The parties thereafter filed their reply briefs on the merits of the review, and Dr. Scott also filed an objection and motion to
strike parts of both the Authority's opening brief and its reply brief. The basis for his motion is that “the Authority's attempt
to modify [upwards] the penalty on review” allegedly is a matter that “[t]his Court has no jurisdiction to rule on ....” 5 The
Authority opposed, arguing that “[w]hen Dr. Scott invoked the ALJ's review of his civil sanction, he placed his civil sanction
fully before the ALJ for a de novo review. He cannot selectively accept the benefits of de novo review while insulating his
sanction from scrutiny.” 6 As it further argued, in opposing Dr. Scott's motion, “the Authority cannot ignore clear legal issues
with the sanction. It would be an absurd result for the ALJ to be mandated to review the sanction de novo while the Authority
is simultaneously prohibited from identifying the legal errors that the review is designed to catch.” 7
After the briefing had concluded on Dr. Scott's motion to strike, the Federal Trade Commission issued its decision in Matter
of Serpe. 8 The Commission held that, where--as in Serpe--“the Authority decline[d] to impose a fine,” I “was not authorized
to impose a civil penalty” under the review authority conferred in HISA cases. 9 As the Commission further emphasized, “Mr.
Serpe and the Authority were in agreement: the ALJ cannot impose a fine sua sponte.” 10 The word “modify” in the ALJ's review
authority, the Commission found, did not authorize “add[ing] a species of sanction that the Authority declined to impose ....” 11

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The underpinnings of Serpe were: (1) the party-presentation principle, which instructs that, “when it comes to what is best for
each party in litigation, courts assume that the parties know best and decide the case accordingly.”; 12 and (2) the “longstanding”
cross-appeal rule, which bars “alter[ing] a judgment to benefit a nonappealing party.” 13 The Commission thus reversed the
$25,000 fine that I had directed.
*2 Upon Serpe's issuance, I afforded the parties the opportunity to submit supplemental briefs on Dr. Scott's motion, and they
have since done so. Dr. Scott argues, in essence, that Serpe is dispositive. Because, he notes, “the Authority is a non-appealing
party ... [n]othing about the [Commission's] reasoning ... was limited to the facts of Serpe.” 14 Thus, Dr. Scott contends that the
scope of this review is “limited ... to the issues [he raised] by [his] application,” and that “[b]ecause the Authority seeks relief
outside those limits, the motion to strike must be granted.” 15
The Authority, on the other hand, largely sidesteps Dr. Scott's motion. It maintains that I should rule on the merits of Dr. Scott's
“application for review, mak[ing] any finding or conclusion that, in [my] judgment ... is proper and based on the record.” 16
If, after undertaking that merits review, I conclude that “the imposed sanctions are too lenient,” then I should “remand this
case for sanctioning consistent with [those] findings.” 17 The Authority's position thus requires that I resolve the merits of its
objections to the sanctions under review.
Having considered both rounds of briefs on Dr. Scott's motion, and the Commission's decision in Serpe, I conclude that the
facts here are materially different, and that the decision is not dispositive. For the reasons discussed below, I hold that I have
jurisdiction to decide the issues Dr. Scott has argued I am disabled from addressing. I therefore deny Dr. Scott's motion.
I am not, however, deciding whether the Authority prevails on the upward sanctions adjustments it has asserted. Nor am I
deciding the appropriate relief if I were to rule in the Authority's favor. These matters will be handled in the merits decision.
I. Analysis.
A. The Differing Facts Presented in Dr. Scott's Case.
1. Party-Presentation.
From the outset of the case against Dr. Scott, HIWU asserted that, if Dr. Scott were found to have committed the two ADRVs
alleged, sanctions could include “for each violation: two years of Ineligibility ...; [and] a fine of up to $25,000 USD ... with
the potential for combined Consequences totaling four years of Ineligibility ... and a fine of up to $50,000 USD.” 18 That
was HIWU's consistent position--two years Ineligibility, running consecutively, and a $25,000 fine for “each” ADRV, totaling
$50,000. 19 As the adverse party on Dr. Scott's review, the Authority necessarily assumes HIWU's arbitration position, and
the Authority itself has maintained that the Arbitrator erred in awarding, without explanation, a single 18-month Ineligibility
period, beginning from the date of HIWU's search of Dr. Scott's vehicle, and a single $25,000 fine. 20
*3 Thus, the Authority contends that the Arbitrator erred by: (1) deviating, without explanation, from the default two-year
Ineligibility period and $25,000 fine for each violation; and (2) failing to run Ineligibility for each violation consecutively and
to accumulate two $25,000 fines to a $50,000 total. 21
There is no party-presentation issue in this case. HIWU framed and preserved the issues relating to sanctions that the Authority
has raised--and that it contends the ALJ may properly hear--on this de novo review. 22 The Authority's only other objection--

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the Arbitrator “back-dating” the Ineligibility period to the date of HIWU's search--arises from the Arbitrator's decision, made
(1) on his own initiative, (2) without notice to either side after all their post-hearing papers were submitted, and (3) without
requiring Dr. Scott to meet the requirements of ADMC Rule 3323(c)(3). The issue raises only a question of law, and “good
cause” to resolve the issue, required by FTC Rule 1.146(a)(1), is shown.
2. The Cross-Appeal Rule.
For similar reasons, the cross-appeal rule does not preclude resolving the issues the Authority has raised, even though if decided
in its favor, the sanctions imposed on Dr. Scott could increase. The cross-appeal rule is, indeed, long-standing and salutary.
However, as the rule's name acknowledges, it pre-supposes that party seeking to benefit on review (or to further burden its
opponent) has a right to appeal or cross-appeal. For example, under federal law prosecutors may appeal a criminal sentence in
prescribed circumstances, and the Department of Homeland Security similarly is deemed “a party affected” by an ALJ decision
for appeal purposes. 23
In HISA cases, however, a decision in Matter of Shell 24 holds that HIWU is not “a person aggrieved by the civil sanction” and
thus cannot seek review of adverse arbitrator rulings. There also is dicta that arguably suggests the Authority cannot seek review
either. 25 While the decision of another ALJ acting in a HISA case is entitled to respectful consideration, it is not binding on
other ALJs. 26 Here, however, since neither HIWU nor the Authority has filed any paper denominated a “cross-application,”
there is no need to revisit Shell II.
Instead, on the facts presented, I conclude that the Authority's express objections to the Arbitrator's award of sanctions are
properly part of the case on review. Both the inter-relatedness of the issues presented and the other reasons discussed below
militate against applying the cross-appeal rule to deny the Court's jurisdiction. 27
First, construing FTC Practice Rule 1.146(a)(1) to categorically import the cross-appeal rule, regardless of the facts, would
be problematic. The Rule provides, in pertinent part, that where “an aggrieved person” such as Dr. Scott files an application
for review, “[w]ithin 10 days of being served ..., the Authority may file a response ... stating the reasons the sanction should
be upheld ....” Although the Rule refers to the Authority's response on “uphold [ing]” the sanctions, that cannot mean that
the Authority must remain silent if it believes they should not be. “De novo” review to “determine whether ... the final civil
sanction ... was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” is not one-sided. 28 Due
process necessarily permits the Authority to be heard on alleged errors.
*4 HISA and the FTC Practice Rules afford an opportunity for ALJ review of the Arbitrator's decision and the sanctions
imposed. “[O]nce established, [this] avenue[] must be kept free of unreasoned distinctions that can only impede open and equal
access to the courts.” 29
Equally significant, although Rule 1.146(a) calls Dr. Scott's filing an ““application,” HISA “does not grant the Administrative
Law Judge the discretion to refuse to conduct such a review.” 30 Thus, Dr. Scott's “application” is effectively a notice of appeal
as of right--and one that requires details not included in a conventional notice of appeal. Rule 1.146(a)(1) instructs that the
contents of an aggrieved party's review application must include, among other things, “the reasons for challenging the sanction
and whether the person requests an evidentiary hearing” along with “[e]ach issue,” citing (a) to those “error[s] based on the
record,” and (b) to “the principal legal authorities the applicant relies upon ....” Together with the Authority's response to this
detailed “application,” the two papers provide more notice and issue-framing than would a notice of appeal and cross-appeal
in a typical civil, criminal, or agency enforcement case. Hearing the issues thus framed promotes, rather than impairs, sound
review, regardless of the titles of the two papers that present them. 31

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Since HIWU asserted and preserved the sanctions issues, which the Authority has now presented for review through the
procedures available to it, Serpe does not control. Dr. Scott's “standing,” “party-presentation,” and preservation arguments are
without merit. 32 I will resolve the question that Dr. Scott's motion raises: does the ALJ's review jurisdiction include considering
upward adjustment of sanctions?
B. The ALJ's Review Jurisdiction.
To reiterate, the ALJ's review authority in this HISA proceeding is, as relevant to this motion, “whether ... (iii) the final civil
sanction of the Authority was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 33 The
review is de novo, which means that ““the [ALJ] does not defer to the [Arbitrator's] ruling but freely considers the matter anew,
as if no decision had been rendered below.” 34 In exercising review authority, the ALJ, as well as the Commission itself, may
““affirm, reverse, modify, set aside, or remand for further proceedings, in whole or in part” and “make any finding or conclusion
that, in [their] judgment ... is proper and based on the record.” 35 In agency enforcement cases involving review under provisions
such as this, the authority for upward sanction adjustment is well-recognized.
1. SEC Review Authority.
*5 Gonnella v. SEC 36 rejects Dr. Scott's argument that I lack jurisdiction to decide whether upward sanctions adjustment is
warranted. There, the SEC had de novo review authority over ALJ decisions, and the SEC was authorized to “affirm, reverse,
modify, set aside or remand for further proceedings, in whole or in part, an initial decision by a hearing officer and may make
any findings or conclusions that in its judgment are proper and on the basis of the record.” 37
After both sides sought SEC review of the ALJ's order, the SEC not only increased the ALJ's sanctions against a securities
trader, but also directed sanctions that the SEC's Enforcement Division “did not specifically request” 38 --a “bar from [Gonnella]
serving or acting in certain capacities with respect to an investment company.” 39 The bar sanction itself was authorized under
the Investment Company Act, and the Court of Appeals upheld the SEC's increase: “[t]he SEC's ability to increase penalties
flows logically from the statutory scheme--its review is de novo, and the ALJ's decision is not final.” 40 The Court further wrote
that it “must not disturb the SEC's choice of sanction unless it is unwarranted in law or without justification in fact ... Here, we
have no reason to doubt that the sanctions imposed by the Commission were both warranted by law and justified in fact.” 41
As the SEC itself has explained: “Our authority to increase the sanction imposed by the law judge is set forth in Rule of Practice
411(a), which provides that “‘[t]he Commission may affirm, reverse, modify, set aside, or remand for further proceedings, in
whole or in part, an initial decision by a hearing officer and may make any findings or conclusions that in its judgment are
proper and on the basis of the record.”D’ 42 The SEC Rule dates back at least to 1964, when it was then embodied in 17 C.F.R.
§ 201.17(g)(2) and later renumbered as part of the SEC's Rules of Practice amendments. 43
Thus, in Matter of O'Leary, 44 the SEC imposed bar orders after the ALJ had imposed shorter suspensions, explaining: “neither
the Administrative Procedure Act nor our own Rules of Practice restrict our power to impose more severe sanctions whenever,
as here, the issue of their adequacy is properly raised on review of an examiner's decision. While we give due consideration
to an examiner's initial decision, the final determination within the scope of our review must and should be our own.” The
accompanying footnote elaborated:
The administrative Procedure Act (5 U.S.C. §557(b)) provides that, “On appeal from or review of the initial decision, the agency
has all the powers which it would have in making the initial decision except as it may limit the issues on notice or by rule.” Rule
17(g)(2) of our Rules of Practice (17 CFR 201.17(g)(2)) provides, “On review the Commission may affirm, reverse, modify,

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set aside or remand for further proceedings, in whole or in part, the initial decision by the hearing officer and make any findings
or conclusions which in its judgment are proper on the record.” 45
*6 The Courts of Appeals have repeatedly upheld the SEC's authority, in reviewing ALJ decisions, to increase sanctions under
Rule 17(g)(2) and its successor. 46
Here, the ALJ's express authority, when called on to review an arbitrator's decision, is analogous to that of the SEC reviewing
an ALJ's initial decision.
2. CFTC Review Authority.
The CFTC has comparable review authority over an initial ALJ decision. Its own Rule of Practice dates back to at least 1976. 47
Brenner v. CFTC 48 is a recent illustration of the Rule's application. After both sides appealed the ALJ's decision, the CFTC
increased the ALJ's trading ban sanction and the fines imposed. On review to the Seventh Circuit, the sanctioned petitioners
argued that the Commission's Enforcement Division failed to re-file its appeal to the CFTC after the ALJ modified his decision.
This failure, they argued, deprived both the CFTC and the Court of Appeals of jurisdiction over the ALJ's sanctions order. 49
The Seventh Circuit was not persuaded.
First, the Court rejected the argument that CFTC lacked jurisdiction as a result of non-substantive modification of the
ALJ's decision. 50 But, ““[e]ven assuming that the [Enforcement] Division's failure to re-file its notice thereby deprived the
Commission of jurisdiction,” the Seventh Circuit upheld the CFTC's order increasing sanctions. 51 The Court noted “once an
appeal ha[d] been taken, the Commission ha[d] broad powers”: “On review, the Commission may affirm, reverse, modify, set
aside or remand for further proceedings, in whole or in part, the initial decision by the Administrative Law Judge and make any
findings or conclusions which in its judgment are proper based on the record in the proceeding.” 52 Therefore, “the petitioners'
appeal properly put the ALJ's initial decision before the Commission.” 53 And under the CFTC's “broad authority once an
appeal is before it, consideration of the adequacy of the sanctions imposed by the ALJ was proper.” 54
Second, regardless of the absence of a cross-petition by the Enforcement Division, the Court of Appeals upheld its own
jurisdiction and affirmed the CFTC's decision to “impos[e] increased sanctions, greater than those initially imposed by the
ALJ ....” 55 Like the Second Circuit, the Seventh Circuit held that “the choice of sanction is not to be overturned unless the Court
of Appeals might find it unwarranted in law or without justification in fact. If the agency's sanction falls within the statutory
limits, it must be upheld unless it reflects an abuse of discretion.” 56
*7 Therefore, to compare the review provisions:
SEC-->ALJ

The Commission may affirm, reverse, modify, set aside or remand
for further proceedings, in whole or in part, an initial decision by a
hearing officer and may make any findings or conclusions that in its
judgment are proper and on the basis of the record.

CFTC-->ALJ

On review, the Commission may affirm, reverse, modify, set aside
or remand for further proceedings, in whole or in part, the initial
decision by the Administrative Law Judge and make any findings or
conclusions which in its judgment are proper based on the record in
the proceeding.

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ALJ-->Arb.

With respect to a matter reviewed under this subsection, an
administrative law judge ... (ii) may affirm, reverse, modify, set
aside, or remand for further proceedings, in whole or in part, the
final civil sanction of the Authority; and (iii) may make any finding
or conclusion that, in the judgment of the administrative law judge,
is proper and based on the record.

FTC-->ALJ

In matters reviewed under this subsection, the Commission may--(i)
affirm, reverse, modify, set aside, or remand for further proceedings,
in whole or in part, the decision of the administrative law judge; and
(ii) make any finding or conclusion that, in the judgement of the
Commission, is proper and based on the record.

Sources, respectively: 17 C.F.R. § 201.411(a), 17 C.F.R. §10.104(b), 15 U.S.C. § 3058(b)(3)(A) & FTC Rule
1.146(d)(3), and 15 U.S.C. § 3058(b)(3)(A) & FTC Rule 1.147(c)(5)(ii)(A) & (B). 57

*8 When the SEC and CFTC promulgated their Rules to review ALJ decisions, it is a fair inference that each agency
sought comprehensive, not restricted, oversight authority. This review authority is qualified only by the requirement that the
determination be “proper” and based on “the record.” Further, as the Gonnella, Brenner, and predecessor decisions reflect,
these agency review provisions operate as an integrated whole to confer broad review authority, which includes increasing
sanctions. And under the prior-construction canon, ““[w]hen administrative and judicial interpretations have settled the meaning
of an existing statutory provision, repetition of the same language in a new statute indicates, as a general matter, the intent to
incorporate its administrative and judicial interpretations as well.” 58
Here, like the notice of appeal in Brenner, Dr. Scott's own review application “put the [Arbitrator's] initial decision before
[this Court].” 59 HIWU framed in the arbitration, and the Authority has advanced on this review, the sanctions contentions
the Arbitrator implicitly rejected (subsequent Ineligibility backdating aside). Like their SEC and CFTC counterparts, the HISA
and the FTC Rules provide for: (1) de novo review authority over the Arbitrator's decision and the resulting sanctions; and (2)
review authority that is virtually identical to that of the SEC and CFTC. 60
***
Both the administrative and judicial case law recognize that the reviewing body may adjust upward, as well as downward,
sanctions imposed by the initial decisionmaker, such as an arbitrator or ALJ, when--unlike Serpe--the issues are properly framed
for, and asserted on, review. So long as “the penalty fixed for the violation is within the limits of [the ADMC Rules] and [the
ALJ] has made an allowable judgment in its choice of remedy,” the sanctions ruling is permissible, subject of course to FTC
review. 61 In prescribing ALJ and FTC oversight over individual enforcement decisions in §§ 3058(b)(2)-(3) & (c)(3), Congress
conferred fulsome, not cabined, authority.
This approach drew on sports law generally, where there was “a robust anti-doping framework that has been tested before
arbitration tribunals for many years, and that has generated a well-developed body of precedent and guidance for interpreting the
provisions in those frameworks.” 62 As one treatise notes in discussing appeals to the Court of Arbitration for Sport (“CAS”),
“the Panel can review all or part of the decision being appealed de novo. ... The Panel might uphold all or part of the decision,
vacate all or part of it, or even increase a sanction.” 63
C. Dr. Scott's “Commission Cross-Appeal” Argument.

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*9 Dr. Scott contends that HISA and the FTC Rules “do permit cross-appeals to correct unlawful penalties; that right just
does not belong to the Authority,” but “[i]nstead,[to] the [Federal Trade] Commission.” 64 This “cross-appeal” from the
Arbitrator's decision, Dr. Scott maintains, requires the Commission, within 30 days, to file an application for review, which
“must identify matters that the Commission finds material to the Administrative Law Judge's review.” 65 By failing to make a
timely filing here, the Commission, Dr. Scott continues, “waived any right to seek an upward modification of the penalty,” and
the Authority “cannot revive the Commission's forfeited cross-appeal ....” 66 Similarly, he maintains that “the ALJ, as agent of
the Commission, cannot revive a right that the Commission itself forfeited.” 67
Dr. Scott bases his argument on HISA § 3058(b)(1), which states, as relevant, that sanctions “imposed by the Authority,
on application by the Commission, ... shall be subject to de novo review by an administrative law judge.” HISA defines
“Commission” to mean “the Federal Trade Commission.” 68
But Dr. Scott's reading of § 3058(b)(1) simply cannot be sound for several reasons. First, the Commission is a non-party to a
HIWU-convened and prosecuted arbitration and has no involvement until the Authority gives it notice of sanctions the Authority
has imposed after an arbitrator's award. The notice itself marks the date on which the 30-day period to seek ALJ review begins
to run; it requires no Commission action at all. 69
The import of Dr. Scott's argument is, therefore, that Congress, in § 3058(b)(1), intended to authorize the Commission, upon
receiving the Authority's notice of sanctions:
(1) to initiate a review of the sanctions arising from a case it did not decide to bring or participate in, or otherwise have a role, and
(2) to somehow decide, during a compressed 30 days, to pursue a “cross-appeal” and identify issues from a free-standing HISA
case that are “material” to a forthcoming review by its own ALJ,
(3) whose decision the Commission itself has authority to review, either “on its own motion” under § 3058(c)(1) or on
discretionary basis if the Authority or the sanctioned person petitions for review under § 3058(c)(2), and thus
(4) hear claimed errors arising from an ALJ proceeding that the Commission may have previously pursued.
The process that would flow from Dr. Scott's argument is simply implausible.
Second, in Dr. Scott's view, the parties to the ALJ's review could be the disciplined individual, the Commission, and the
Authority. The only way the Authority's views on upward sanctions adjustment could be heard would seemingly be through the
Commission if it concurred in the Authority's position and was prepared to argue it. But if the two parties did not align--or if
the Commission simply refrained from any cross-appeal--the Authority could only preserve its position on sanctions before the
ALJ “for the record,” so that after the ALJ's decision, it could seek Commission review. 70
*10 Thus, if Dr. Scott's argument were sound, unless there was Commission participation and alignment with the Authority in
the review before the ALJ, the first time the Authority could present its position on sanctions would be on an application to the
Commission to review the ALJ's decision. Such an unusual review process would deprive the Commission of the benefit of an
ALJ decision, fashioned after a full vetting of the sanctions issues by two adversaries, to aid its own review decision-making. 71
For these reasons, Dr. Scott's Commission “cross-appeal” argument is markedly unconvincing. I reject it as necessary “to avoid
results glaringly absurd”--““long ... a judicial function.” 72 Even “[t]he most natural grammatical reading” of a statute may be
overlooked where it “would produce results that [are] not merely odd, but positively absurd.” 73

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II. Conclusion.
HISA calls for a de novo review by the ALJ to determine “whether ... the final civil sanction ... was arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law.” 74 If, on review, the Authority contends that an arbitrator's sanction fails
to measure up--and if, as here, the issues are properly preserved and asserted--there is ALJ jurisdiction to decide the dispute,
regardless of whether increased sanctions could result.
Accordingly, Dr. Scott's motion is DENIED, and his objection is OVERRULED.
Ordered:
Jay L. Himes
Administrative Law Judge
Date: July 16, 2026
FTC

Footnotes
57

And, to be clear, the SEC and CFTC review regulations are simply illustrative. See also 19 C.F.R. § 210.45(c) (ITC),
24 C.F.R. § 26.52(k) (HUD), 31 C.F.R. § 501.742(a) (Treasury Office of Foreign Assets Control), 47 C.F.R. § 1.117(c)
(FCC).

1

Capitalized terms used, but not defined, in this Order, are from HISA Rule 1020 of the General Provisions included
in the ADMC Program rules.

2

Appeal Book (“AB”) 7678 (Arbitrator's Final Decision).

3

Authority's Opening Brief at 15, dated June 12, 2026.

4

Id. See also id. at 13, at ¶¶ e-g (Proposed Order).

5

Scott Memorandum in Support of Objections and Motion to Strike at 1 (“Scott Mem.”), dated June 22, 2026.

6

The Authority's Response to Dr. Scott's Objection and Motion at 5 (“Authority Response”), dated June 30, 2026. See
also id. at 8 (“It should come as no surprise to Dr. Scott that when he requested a de novo review of his civil sanction,
he would get a de novo review of his sanction--for better or for worse.”).

7

Id. at 6.

8

No. 9441, 2026 WL 1906387 (FTC June 30, 2026).

9

Id. at *1, *8.

10

Id. at *8.

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11

Id. at *10.

12

Id. (footnote omitted).

13

Id. at *11 (footnote and internal quotation marks omitted) (quoting Greenlaw v. United States, 554 U.S. 237, 244 (2008)).

14

Appellant's Supplemental Brief in Support of Motion to Strike at 3, dated July 9, 2026.

15

Id. at 5.

16

The Authority's Supplemental Response at 3-4, ¶ 6 (internal quotations omitted) (quoting 15 U.S.C. § 3058(b)(3)(A)
(iii)), dated July 9, 2026.

17

Id. ¶¶ 5, 7.

18

AB 119 (EAD Notice) (emphasis in original).

19

See AB 146 (EAD Charge), 1091 & 1112 (opening prehearing brief), 5428 (reply prehearing brief), 6424 (closing
argument at hearing), 6478, ¶ 85 (post-hearing proposed conclusions of law), 7541, ¶ 3.d (supplemental authority
submission).

20

Id. 7678 (Arbitrator's Final Decision), Authority Response at 7.

21

See Authority's Opening Brief at 15, 22-23, 26-27; Authority's Proposed Conclusions of Law ¶¶ 13-14, 20.a & b;
Authority Response at 8.

22

See Authority's Opening Brief at 15, 22-23, 26-27; Authority's Proposed Conclusions of Law ¶¶ 13-14, 20.a & b;
Authority Response at 8.

23

See 18 U.S.C. § 3742; BIA PRAC. MAN. Ch. 4 (E.O.I.R.), 1999 WL 33435429, at *4 (§ 4.3(a)(2)) (Nov. 14, 2022)
(“DHS is entitled to appeal an immigration judge decision and is deemed a party for any appeal filed by the respondent.”).

24

Order (1) Dismissing HIWU's Application for Review and (2) Denying Dr. Shell's Motion to Strike
as Moot (ALJ Dec. 6, 2024) (“Shell II Jurisdiction Order”), https://www.ftc.gov/system/files/ftc_gov/
pdf/612325.2024.12.06_order_dismissing_hiwus_application_for_review_and_denying_dr._shells_motion_to_strike.pdf.

25

Shell II Jurisdiction Order at 1, 3, 5, 6-7.

26

See, e.g., Am. Elec. Power Co. v. Conn., 564 U.S. 410, 428 (2011) (trial level judges “lack authority to render precedential
decisions binding other judges, even members of the same court.”); Camreta v. Greene, 563 U.S. 692, 709 n.7 (2011)
(“A decision of a federal district court judge is not binding precedent in either a different judicial district, the same
judicial district, or even upon the same judge in a different case.”) (citing 18 J. Moore et al., MOORE'S FEDERAL
PRACTICE § 134.02[1] [d], at 134-26 (3d ed.2011)).

27

See Arizona Alliance for Cmty. Health Ctrs. v. Arizona Health Care Cost Containment Sys., 47 F.4th 992, 998 n.2 (9th Cir.
Cir. 2022) (the court's “de novo review” permitted consideration of an “inherent[ly] interrelated[]”issue); Wellpoint, Inc.
v. Comm'r of Internal Revenue, 599 F.3d 641, 650 (7th Cir. 2010) (Doubt “should therefore be resolved against finding
that ... failure to file a cross-appeal forfeited [the party's] right to argue ... alternative ground[s]”) (citing authorities);
Georgia-Pacific Consumer Prods. LP v. NCR Corp., 40 F.4th 481, 485 (6th Cir. 2022) “[M]any courts of appeals have
long considered the cross-appeal rule to be a non-jurisdictional rule of practice, not a statutory command.”) (internal
quotation marks omitted; citing authorities).

28

See 15 U.S.C. § 3058(b)(1) & (b)(2)(A)(iii); FTC Practice Rule 1.146(b)(3).

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29

Rinaldi v. Yeager, 384 U.S. 305, 310 (1966). See also Adsani v. Miller, 139 F.3d 67, 77 (2d Cir. 1998) (“[P]rinciples of due
process and equal protection mandate that an appeal process established by statute must be fairly and equally accessible
to all litigants.”); 4 C.J.S. Appeal and Error § 44 (“Even where there is no constitutional right to appeal in a state, once
a state has created such a statutory right, the procedures afforded to secure that right must comport with due process and
equal protection.”). Cf. Lindsey v. Normet, 405 U.S. 56, 77 (1972) (“When an appeal is afforded, ... it cannot be granted
to some litigants and capriciously or arbitrarily denied to others without violating the Equal Protection Clause.”).

30

87 Fed. Reg. 60077 (Oct. 4, 2022).

31

See 15A Charles Alan Wright & Arthur R. Miller, FEDERAL PRACTICE & PROCEDURE § 3904 (3rd ed. Apr. 2026
update) (“Probably the [cross-appeal rule] does have some value in fostering repose, identifying the issues to be met,
shaping the progress of the appeal, and regulating enforcement of the judgment. The uncertainties, however, suggest
that the requirement should be administered with substantial flexibility.”) (footnote omitted).

32

See Scott Mem. 2-5.

33

15 U.S.C. § 3058(b) (1)(b) & (2)(A)(iii). See also FTC Rule 1.146(b)(3).

34

Bartolome v. Sessions, 904 F.3d 803, 812 (9th Cir. 2018) (construing de novo review by an immigration judge). See also,
e.g., Harris v. Lincoln Nat'l Life Ins. Co., 42 F.4th 1292, 1295 (11th Cir. 2022) (“De novo means ... a fresh, independent
determination of the ‘matter”D’) (quoting with approval Doe v. United States, 821 F.2d 694, 697-98 (D.C. Cir. 1987)).

35

15 U.S.C. § 3058(b)(3)(A)(ii) & (iii); FTC Rule 1.146(d)(3). See also 15 U.S.C. § 3058(c)(3)(i) & (ii); FTC Rule 1.147(c)
(5)(ii)(A) & (B) (Commission review).

36

954 F.3d 536 (2d Cir. 2020), aff'g Matter of Gonnella, No. 4476, 2016 WL 4233837 (SEC Aug. 10, 2016).

37

Id. at 550.

38

Id. at 551.

39

Gonnella, 2016 WL 4233837, at *12 n.52.

40

Id., 954 F.3d at 551.

41

Id. (internal quotation marks and citation omitted).

42

Matter of Altman, No. 63306, 2010 WL 5092725, at *19, n.68 (Nov. 10, 2010) (quoting 17 C.F.R. § 201.411(a)), aff'd,
666 F.3d 1322 (D.C. Cir. 2011).

43

See SEC Part 201-Rules of Practice, 29 Fed. Reg. 9486, 9489 (July 11, 1964); 60 Fed. Reg. 32738, 32813 (June 23,
1995) (§ 201.411(a)).

44

No. 3-503, 1968 WL 88160, at *6 (July 25, 1968) (footnote omitted).

45

Id. at n.25. See also Matter of Valicenti Advisory Servs., Inc., No. 3-8854, 1997 WL 362000, at *21 (ALJ July 2, 1997),
rev'd, 1998 WL 798699, at *6 (SEC Nov. 18, 1998) (imposing a cease and desist order and fines, and directing mailing
of the Commission's order to the Respondent's clients, after the ALJ limited the sanction to censure), aff'd, 198 F.3d
62, 65 (2d Cir. 1999); Matter of Sheldon, No. 3-6626, 1992 WL 353048, at *18-19 (SEC Nov. 18, 1992) (imposing a
“total bar” after the ALJ had permitted reapplication with two years), aff'd, 45 F.3d 1515 (11th Cir. 1995); Matter of
Fee, No. 1082, 1992 WL 213847, at *3 (SEC Aug. 24, 1992) (imposing an industry bar after the ALJ imposed a 90-day
suspension), aff'd, 998 F.2d 1002 (3d Cir. 1993); Matter of Long, No. 3-5788, 1981 WL 37852, at *5 (SEC Oct. 6, 1981)
(imposing an “unqualified bar ... from association with any investment advisor” after the ALJ imposed a 12-month bar).

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46

See, e.g., Gross v. SEC, 418 F.2d 103, 107 (2d Cir. 1969) (upholding SEC sanctions that were “substantially more
severe than the suspension ordered by the hearing examiner”); Hanly v. SEC, 415 F.2d 589, 599 (2d Cir. 1969) (“The
Commission clearly has the authority to modify, including the authority to increase, sanctions ordered by a hearing
examiner in his initial decision, and we so hold.”) (footnote omitted); Nees v. SEC, 414 F.2d 211, 217 (9th Cir. 1969)
(rejecting the argument that “it was improper for the Commission to impose a harsher punishment than the hearing
examiner.”).

47

See Adoption of New Rules and Revocation of Old Rules, 41 Fed. Reg. 2508, 2521 (§§ 10.104(a) & (b)) (Jan. 12, 1976).

48

338 F.3d 713 (7th Cir. 2003).

49

Id. at 720-21.

50

Id. at 721-22.

51

Id. at 722.

52

Id. (quoting 17 C.F.R. § 10.104(b)).

53

Id.

54

Id.

55

Id.

56

Id. (cleaned up).

58

Bragdon v. Abbott, 524 U.S. 624, 645 (1998). See also Lorillard v. Pons, 434 U.S. 575, 581 (1978) (“[W]here, as here,
Congress adopts a new law incorporating sections of a prior law, Congress normally can be presumed to have had
knowledge of the interpretation given to the incorporated law, at least insofar as it affects the new statute.”); United
States v. Lipsky, No. 24-1351, 2025 WL 692345, at *2 (6th Cir. Mar. 4, 2025) (“That this new provision mirrors the old
one offers a good reason to assume it operates in the same way.”).

59

Brenner, 338 F.3d at 722.

60

See also Guttman v. CFTC, 197 F.3d 33, 41 (2d Cir. 1999), aff'g sub nom. Matter of Glass, No. 93-4, 1998 WL 205134,
at *22, *25 (CFTC Apr. 27, 1998) (the CFTC imposed a permanent trading ban after the ALJ had imposed a five-year
ban, and increasing to $300,000 the fine imposed on a respondent (who did not appeal to the Second Circuit) after
the ALJ had ordered $150,000); Vercillo v. CFTC, 147 F.3d 548, 552, 558-59 (7th Cir. 1998) (the CFTC increased the
trader's revocation of registration from five years to permanent); Ryan v. CFTC, 145 F.3d 910, 915-16, 922 (7th Cir.
1998) (the CFTC imposed a six-year market ban after the ALJ had granted floor trader status); LaCrosse v. CFTC, 137
F.3d 925, 928, 929 (7th Cir. 1998) (the CFTC imposed a five year trading ban after the ALJ had imposed a three-year
ban); JCC, Inc. v. CFTC, 63 F.3d 1557, 1564 (11th Cir. 1995) (the CFTC revoked the trader's floor registration after
the ALJ declined to do so); Lawrence v. CFTC, 759 F.2d 767, 770-71 (9th Cir. 1985) (the CFTC suspended registration
although the ALJ had not done so); Silverman v. CFTC, 562 F.2d 432, 437, 438-39 (7th Cir. 1977) (the CFTC revoked the
trader's registration after the ALJ declined to do so); Nyman v. U.S. Center for SafeSport, No. 3:20-cv-2256, 2021 WL
857084, at *3 (N.D. Ohio Mar. 8, 2021) (There was no error where, following the sports regulator's sanctions award, the
arbitrator “impose[d] a sanction within the universe of sanctions permitted by the SafeSport Code.”); Matter of Soule,
No. 99-4, 2005 WL 1993860, at *1 (CFTC Aug. 17, 2005) (the CFTC imposed a $400,000 fine after the ALJ imposed
none); Matter of Saberi, No. 01-11, 2005 WL 517453,at *8-9 (CFTC Mar. 2, 2005) (the CFTC shortened the trading
ban period, while expanding it to apply to all regulated markets, and not simply to the Chicago Mercantile Exchange,
as the ALJ had ordered).

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61

G. H. Miller & Co. v. United States, 260 F.2d 286, 296 (7th Cir. 1958). See also Mathis v. SEC, 671 F.3d 210, 216 (2d
Cir. 2012) (“We will not disturb the SEC's choice of sanction unless it is unwarranted in law or without justification in
fact.”) (internal quotation marks omitted); Altman v. SEC, 666 F.3d 1322, 1329 (D.C. Cir. 2011) (upholding a “sanction
[that] was statutorily authorized”); CFTC v. Levy, 541 F.3d 1102, 1112 (11th Cir. 2008) (upholding a “per violation”
civil penalty that was authorized by regulation); Wilson v. CFTC, 322 F.3d 555, 560 (8th Cir. 2003) (“[S]anctions within
statutory limits will be upheld in the absence of an abuse of discretion.”) (citing authorities); LaCrosse, 137 F.3d at 929
(“If the agency's sanction falls within the statutory limits, it must be upheld unless it reflects an abuse of discretion.”)
(internal quotation marks deleted).

62

88 Fed. Reg. 5073 (Jan. 26, 2023). See also AB 1750 (2021) (WADA Code § 13.1.2 (“In making its decision, CAS shall
not give deference to the discretion exercised by the body whose decision is being appealed.”) & n.84 (Comment: “CAS
[review] proceedings are de novo.”); ADMC Rule 3070(d) (The “WADA Code Program” and related “case law ... may
be considered when adjudicating cases relating to the Protocol, where appropriate.”).

63

Adam Lewis & Jonathan Taylor, SPORT LAW AND PRACTICE 1189 (4th ed. 2021). See also Court of Arbitration
for Sport, Code of Sports-related Arbitration R57 (eff. July 1, 2025) (“The [CAS] Panel has full power to review the
facts and the law. It may issue a new decision which replaces the decision challenged or annul the decision and refer
the case back to the previous instance.”); Zamalek SC v. Sassi, CAS 2022/A/8679, at ¶ 140 (Mar. 27, 2023) (“CAS does
not act as an administrative court reviewing an act of an administrative authority where, usually, the scope of review is
characterised by minimum standards of scrutiny .... In contrast, it is the duty of a CAS panel in an appeals arbitration
procedure to make its independent determination of whether the Appellant's and Respondent's contentions are correct
on the merits ....”).

64

Scott Mem. at 3 (emphasis omitted).

65

Id. at 3-4 (emphasis added) (quoting FTC Practice Rule 1.146(a)(1), entitled “Review of Civil Sanctions by the
Administrative Law Judge” and providing for the 30-day filing deadline).

66

Scott Mem. at 4.

67

Id. at 5.

68

15 U.S.C. § 3051(3).

69

15 U.S.C. § 3058(b).

70

See 15 U.S.C. § 3058(c)(2) and FTC Rule 1.147(b). See also Scott Mem. at 3-4 (arguing the Authority's ability to seek
Commission review).

71

Cf. Sheet Metal Workers' Health & Welfare Fund of N.C. v. Law Off. of Michael A. DeMayo, LLP, 21 F.4th 350, 355 (6th
Cir. 2021) (Requiring that an issue be raised below, assures “that both the parties and this Court have the benefit of the
district court's assessment of the issue when the case is taken up on appeal” and enables the appellate court “to review
the case presented to the district court, rather than a better case fashioned after a district court's unfavorable order.”)
(internal quotation marks omitted).

72

Armstrong Paint & Varnish Works v. Nu-Enamel Corp., 305 U.S. 315, 333 (1938) (footnote citing authorities omitted).

73

United States v. X-Citement Video, Inc., 513 U.S. 64, 68, 69 (1994). See also Holy Trinity Church v. United States, 143
U.S. 457, 460 (1892) (“If a literal construction of the words of a statute be absurd, the act must be so construed as to avoid
the absurdity.”) (internal quotation marks omitted); United States v. Mannava, 565 F.3d 412, 416 (7th Cir. 2009) (“an
interpretation that, though literally correct--though dictated by “plain meaning”--was absurd, and therefore erroneous.”).

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74

15 U.S.C. § 3058(b)(2)(A)(iii).
2026 WL 2111924 (F.T.C.)

End of Document

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Aftc%3Acb13cd8bb48ffac2. Public record. Not legal advice.